Yesterday, they announced their Maginot Line[2] in the sand: Hey, this digital thingie looks pretty cool!

More than a day late and a few dollars short, the stock got whacked yesterday to the tune of 13% (ouch). Unless the company can pull off a miraculous transformation, there’s probably more to go.

Their very belated shift into digital has allowed both nascent competitors and established names to create a marketplace where no one company dominates. Thus, despite their 100 year history of owning the film market, Kodak is simply another entrant in a crowded field.

This may become a classic B school case. (Moral: Cannibalize yourself before someone else does)

I believe the inexorable decline of the once great company will accelerate over the next decade. Somewhere between now and then, Kodak will ignomiously get booted from the Dow, joining a growing list of previous stars on the road to irrelevancy.

They had their opportunities: Aggressive moves into digital hardware or, cobranding with camera manufacturers; creating a software solutions (See Apple’s iPhoto for an example); On line photo sites like Shutterbug.com, Snapfish.com, snap-shot.com, etc. could have been snatched up on the cheap after the dotcom crash. EK doesn’t even own EastmanKodak.com, for crying out loud.

Kodak is not one but two paradigm shifts behind the times, as they make their foray into digital cameras. Two days before Kodak’s announcement, camera phones reach a milestone: For the first time, global sales of camera-enabled mobile handsets[3] surpassed sales of conventional digital cameras (in 1H 2003). (Thanks to
Due Diligence for the pointer).

They have seen the coming digital challenge, and dithered for quite a few years. Hey, I hear PCs are gonna be big also.

UPDATE: 02/06/04 3:04PM

Interesting trashing of Kodak’s accounting from BusinessWeek:

Kodak’s Fuzzy Numbers [4]
The company has taken “one-time” charges every year for the past 12
Faith Arner
Business Week, FEBRUARY 9, 2004